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Marico is one of India’s leading consumer products companies in the global beauty and wellness space. It touches the lives of 1 out of every 3 Indians, through its portfolio of brands such as Parachute coconut hair oil, Saffola edible oil, Saffola ImmuniVeda, Saffola Mealmaker, Hair & Care, Parachute Advansed, Nihar Naturals, Mediker, Coco Soul, Revive, Set Wet, Livon and Beardo and Just Herbs, etc. It has international presence in over 25 countries and a consumer products portfolio with brands like Parachute, Parachute Advansed, HairCode, Fiancée, Caivil, Hercules, Black Chic, Code 10, Ingwe, X-Men, Mediker SafeLife, Thuan Phat and Isoplus. Further, it operates with 7 factories in India, located at Puducherry, Perundurai, Jalgaon, Guwahati, Baddi, and Sanand.

Business mix to drive growth: Marico’s business is divided amongst India and International business wherein contribution from India business is higher in the range of 75-77% while that of international business is ~23-25%. Going forward, the management strategy is to drive high single digit volumes growth and continuously gain market share for its domestic business while drive double digit constant currency growth for international business.

Leader in Hair Oil portfolio: Marico has a healthy portfolio in the hair oil segment (contributing to ~58-60% of the Domestic business revenue) with presence in coconut oil and premium value added hair oils. Going ahead, the management expects parachute brand to grow in the range of 5-7% volumes while value-added products to grow in high-single digit led by more innovations in premium segment, improvement in product mix and expanding distribution reach. Additionally, easing in crude & copra prices will continue to help margin expansion while anticipation of pickup in rural demand is to support growth of mass personal care and oil products at the bottom of the pyramid.

Saffola Brand is just not limited to oil but products for health: Over the past few years, Marico has been strengthening the portfolio by adding products to its Saffola Brand and it contributes ~31% share in Domestic business revenue. First, it was only edible oil but in the last few years with increasing demand and plan for extension it introduced food & related products such as Oats, salt, honey, instant noodles, immunity-boosting products, etc. Going ahead, Saffola edible Oil volumes are expected to grow in high single digit while its food portfolio will see double digit growth led by innovations, focus on health products and increasing distribution reach

Focus on building digital portfolio: Marico is very much focused on expanding its digital portfolio and is currently earning ~13% i.e. ~950cr of the domestic business revenue which includes Rs 600cr from foods and Rs 350cr from premium personal care segment. Going ahead, they have plans to increase revenue share by earning ~Rs 1,250cr (Rs 850cr from food and Rs 400cr from premium personal care) driven by focus on innovation and premiumization as well as scaling up business via digital initiatives.

Financials & Valuation: On the financial front, Marico has seen a Revenue/EBITDA/ PAT growth of 9%/9.7%/9.8% CAGR over FY18-23 and ahead from FY23-25E we have estimated its Revenue/EBITDA/PAT to grow at 11.5%/16.9%/17.1% CAGR. We remain optimistic on the growth prospects and have initiated coverage with a Buy rating and a target price of Rs 646.

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